labels: passenger cars, honda motor company, automotive, advertising/branding
Honda launches new Citynews
Mohini Bhatnagar
07 November 2003

Hyderabad: The threat of losing the market share to new models that are selling successfully - such as the General Motors Optra and Toyota Corolla - has made Honda Motor quickly replace the older version of the City with a new model in its place without too much fanfare.

According to the company, the new City is actually a new car and has nothing in common with the older version, apart from its name. The company says the new City is actually built on the platform of the Fit Aria, Honda''s compact car in Japan.

The new City is powered by a 1.5-litre petrol engine, the same as the Honda City Exi model, though it comes with lower bhp at 77 at 5,000 rpm against 100 bhp sported by the older version. The new City is available in three variants priced at Rs 6.67 lakh, Rs 7.07 lakh and Rs 7.67 lakh (ex-showroom Delhi).

Honda is pitching heavily on the aspect of fuel-efficiency for selling the new City. It claims the car is at least 40 per cent more fuel-efficient than the previous version and has given 17.5 kms/litre in test conditions. The fuel efficiency of the car is a vast improvement over the previous City, which offered about 15 kms/litre under test conditions and normally gave 10-12 kms/litre in city driving.

A mileage such as 17.5 kms/litre under test conditions will translate into 14-15 kms/litre in city driving, which will make it an attractive buying option in the Indian market. The only other vehicles that offer such mileage are smaller cars like the M800 and the Santro. But whether mileage alone will give the new City a leadership status is debatable.

For one, the Indian automobile market is now very different from what it was when Honda first launched the City. There are now a number of global players against only one (Maruti Suzuki) earlier. And all of them are fighting tooth and nail for leadership status in the C segment where the new City is positioned.

The hugely popular GM Optra has been a runaway success with its distinctive looks - premium styling coupled with down-to-earth pricing. Then there is the Corolla and the Skoda Octavia, which come backed with the brand equity of the Toyota and the Skoda, respectively.

Moreover, all these models (priced in the same range as the new City) come with bigger and more powerful engines. The GM Optra comes with a 1.8-litre engine, which produces 115 bhp at 6,000 rpm, while the Corolla has a 1.8 litre engine that generates 125 bhp. The Skoda has a 2-litre engine that gives 111 bhp at 5,100 rpm.

Also, car buyers in the Rs 6-lakh-plus category have not given a high degree of priority for fuel-efficiency as entry-level buyers. Car buyers in the C segment-plus category usually prefer cars for their looks, styling and premium image than for fuel-efficiency.

Honda Motor is targeting sales of about 12,000 units by March 2004 and foresees the demand to spurt to 2,000 units per month in the next fiscal and to cater to this, the company intends to start a second shift at its Greater Noida facility from 15 November.

With this, production will go up from 53 cars per day to 100 cars a day. Apart from the City, Honda also sells the Honda Accord luxury car and the CR-V sport utility vehicle in India. The company has sold over 60,000 units of the older version of the City since its launch in the country. It has retained the name City because of the tremendous brand value the car enjoys in the country.

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Honda launches new City